AutoZone’s technical analysis
So far in this series, we’ve covered analysts’ estimates for AutoZone’s (AZO) fiscal 1Q18 revenues, profit margins, and valuation multiples. AZO’s valuation multiples are trending lower than those of its peers (XLY) O’Reilly Automotive (ORLY) and Advance Auto Parts (AAP).
AutoZone’s valuation multiples are on a downward trajectory due to stagnation in profit margins and a decreasing sales growth rate. While valuation multiples can help investors make informed investment decisions, key levels are crucial to know before entering and exiting a particular stock position.
Key support and resistance levels
On November 27, AutoZone stock was trading on a bearish note at $637.95. The stock posted an all-time high of $819.54 in July 2016 and since then, it has lost ~22.2%.
In the last three months, AZO has outperformed the broader market. During this period, AutoZone stock has risen 23.7% compared to the 16.0% increase in the S&P 500 Index (SPY) (SPX-INDEX).
AutoZone stock price is trading above an ascending trend line, as shown in the chart above, which should act as an immediate support in the coming sessions.
AZO’s 14-day RSI (relative strength index), the key technical momentum indicator, is hovering at 68.2, which is above the line of equilibrium. This level in RSI typically represents investors’ positive sentiments and underlying strength in the stock’s momentum.
On the downside, an immediate horizontal support lies near the $610.00 level in AutoZone stock. The stock could face minor resistance near $667.00 going forward.